The markets, including the E-mini S&P 500 (ESZ13:CME) tell us something every day in the form of price action and volume. In simple terms, the markets are a collective of traders and investors making buy or sell decisions and decisions about how much of each to do. The net sum is reflected in the day's performance and numbers we can analyze.
Looking at the markets in totality (breadth) there are some clever ways of listening and finding a voice in the cacophony. One of those is looking at the NYSE new 52-week highs (FINH.Z). Driving a single stock to a 52-week high is bullish for that stock. Driving a number of stocks to new 52-week highs is market bullish, and repeating that upward move for a series of days is extremely bullish.
The chart below is the number of 52-week new highs on the NYSE since May, where we topped around the 500 mark. The two new market highs in August and September were accomplished with a small set of new highs and we had a divergence underway with higher prices and lower peaks in the new highs. That was erased in October when the market was driven to all-time highs. Now we are watching as we set market highs again and the NYSE reaches our 300+.
The line of new 52-week highs in the ESZ has been marked with upper and lower thresholds of 300 and 100, my lines in the sand. Above 300 = bullish, below 100 = bearish. A trip above 300 marks higher prices to come and when we move from above 300 to below 100, that has been working well as a marker for a directional change. We have not seen a drop below 100 since the October 500 peak and currently we are in no man's land. Stuck between those lines. This is a good time to start listening.
As always, use stops and keep an eye on the 10-handle rule. Don't forget to catch MrTopStep on The Closing Print video found under the OptionsTV page (top bar). We report directly from the SPX pits, wrapping up the day and positioning for trade tomorrow.
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